We are reiterating our view that, due to gasoline demand growing substantially over the last several years coupled with a lack of new refining capacity being commissioned, gasoline prices in Russia have started to depend less on the netback, and are now predominantly defined by the balance of demand and supply domestically.
To recap, gasoline retail prices grew 18% YoY in 2011 (Central region). However, we do not expect any significant increase this year. According to our estimates, retail prices for gasoline are to grow 6% in 2012. We believe that regulatory pressure from the Federal Anti-Monopoly Service, if it materialises, might distort the gasoline retail market and, in the worst case, lead to a deficit of gasoline in Russia.